Steel Authority of India Limited (SAIL), a well-known steel company in the country, has released its first quarter results for the financial year 2025-26. At first glance, the figures may seem decent, but the real story emerges at the profit level. Looking at the quarter-on-quarter performance, SAIL has suffered a significant setback in profits. Earnings have been much lower than expected, which has increased concerns about this stock in the stock market.
EBITDA Below Expectations, Losses Increase Concern
SAIL's EBITDA in this quarter was around ₹27,600 crore, which is said to be 16 percent lower than market expectations. Experts believe that heavy losses in inventory are a major reason for this. The company suffered a loss of about ₹9,500 crore due to falling prices. Even though the company may have received some relief from better steel sales and railway orders, those gains are not considered permanent. These benefits were one-time and are unlikely to be repeated in the next quarters.
Slight Increase in Production, but Sluggish Sales
SAIL sold 4.55 million tonnes of steel in this quarter, including production for NMDC. On an annual basis, this figure looked somewhat better, but a decline was seen compared to the previous quarter. This means that the stability in demand that is considered necessary for a b recovery has not yet arrived. The company's production units operated according to capacity, but sales could not accelerate due to lack of support from the market.
SAIL in the Eyes of Brokerage Houses
After SAIL's weak results, several brokerage houses have expressed their views on its stock. One thing is common in the opinion of all of them: a tremendous increase cannot be expected in it right now. Most have maintained a HOLD rating, which directly means that investors should neither sell nor buy it for the time being.
ICICI Securities' Opinion
ICICI Securities has considered SAIL's latest results to be weak. They have reduced the target price of the stock to ₹120, while it is currently trading around ₹126. They believe that there is pressure in the steel sector and the decline in the company's earnings is an indication that the situation is not going to improve quickly.
Nuvama Institutional Equities Reduces Target
Nuvama had earlier set a target of ₹154 for SAIL, which has now been reduced to ₹135. According to them, the fall in steel prices and the large capital investment being made by the company are affecting profits. This means that investors should not expect very large growth in the near future.
Analytical Report by Antique Stock Broking
Antique has also exercised caution regarding the company's future. They have set a target price of ₹129 for the stock and advised a HOLD. They say that SAIL may have to face many challenges in the coming times, including continuous fall in steel prices, increasing capex and weak demand.
Support Not Available Due to Pressure in the Steel Sector
SAIL is bearing the brunt of the pressure prevailing not only at the company level but also in the entire sector. There is no stability in the demand for steel in domestic and global markets. Increasing supply from China and falling demand in its domestic market have put pressure on international prices. Even in India, the demand is not showing the momentum it needed due to delays in infrastructure projects and sluggishness in the private sector.
Focus on Saving Capital Instead of Returns
Market experts believe that SAIL's current performance is a sign for investors to be cautious. Currently, the company is engaged in capital investment, but profit is not visible in return. This is the reason why all the major brokerage houses are talking about adopting a strategy of saving capital instead of returns on this stock.
SAIL's Road Ahead Looks Difficult
The latest quarterly results and market reaction are making it clear that it is not easy for SAIL to get a sharp jump in the coming times. The company will have to focus on its business model, cost control and demand enhancement measures. Until steel prices and demand stabilize globally, SAIL's pace will appear to be থেমে (thami - stopped/slowed down).
